European banks are facing a real lending problem. Against the backdrop of interest rates that have increased exponentially recently, both individuals and companies avoid requesting financing.
Even if the financial reports published by the big European banks show that they are not doing badly economically, having gained from the increase in interest rates, they lose on the other hand, when it comes to the lending area.
In Europe, there is a reluctance of consumers to take out new loans, and the phenomenon has a very simple explanation.
The banks, with one foot in the hole. People no longer borrow, they have taken the fear of high interest rates
On the one hand, we are talking about the very steep interest rates that appeared as a result of the tightening of monetary policies, and on the other hand, we are talking about the general economic context.
With an international cost of living crisis, so much unpredictability and high inflation, it’s only natural that we have more weight when it comes to taking on new financial commitments and new loans. Basically, people calculate their steps much better and prefer to wait, rather than rush to the banks to borrow, whether we are talking about mortgage loans or personal needs.
According to the data of a study published on Tuesday by the European Central Bank (ECB), the growth of bank lending in the euro zone slowed significantly in April. According to economists, people are more skeptical and even wait to see how the global economic situation will evolve before taking on a new loan.
Specialists categorize the new data from the banking sector as “weak”.
“The weak monetary data in April adds to the bleak economic outlook for the rest of this year and could slow the rate of interest rate hikes by the European Central Bank,” said Bert Colijn, economist at ING.